Market Structures: Perfect Competition to Monopoly
Market Structures and Competition
Competition is the rivalry among several firms that want to sell the same kind of goods or services to the plaintiffs in that market.
Types and Models of Market by Level of Competition
- Perfect Competition: The consumer is benefited most as it is at a very low price and a very high amount of goods are produced. The product sold is identical.
- Imperfect Competition:
- Monopolistic Competition: Characterized by having a large number of bidders.
- Oligopoly: Oligopolistic firms
Key Concepts in Economics: Scarcity, Markets, and Efficiency
1. Defining Economics and the Questions Economists Answer
Economics is the social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity, all the things that influence those choices, and the arrangements that coordinate them. Economics has two parts:
A) Microeconomics: The study of the choices that individuals and businesses make and the way these choices interact and are influenced by governments.
B) Macroeconomics: The study
Uneven Development in the Neoliberal Era
What is Neoliberalism?
Neoliberalism is an economic and social policy model that shifts control of production factors from the public sector to the private sector. Emerging in the 19th and 20th centuries, neoliberalism advocates for governments to reduce subsidies, limit protectionism, decrease deficit spending, reform tax laws to broaden the tax base, and open markets for trade. It aims to abolish fixed exchange rates, privatize state-owned property, and establish privately managed businesses.
Neoliberalism
Read MoreComparative Advantage, ISI, and the Impact of Culture on Economies
Comparative Advantage and Global Welfare
World output increases when countries specialize in producing goods and services where they have a comparative advantage, as defined by economist David Ricardo.
Countries should allocate their resources to produce goods and services for which they have a comparative cost advantage. This leads to more efficient production, where one partner makes products cheaper, better, and faster than its trading partner.
In conclusion, trade based on comparative advantage
Read MoreUnderstanding Net Exports and Capital Outflow in Open Economies
Chapter 6 Homework: Key Concepts in Open Economies
Net Exports and the Relationship with National Saving and Investment
The value of net exports is also the value of the difference between national saving and domestic investment.
Positive Net Capital Outflow
If net capital outflow is positive, then the trade balance must be positive.
National Saving Exceeds Domestic Investment
If national saving exceeds domestic investment, then net exports are positive, and net capital outflows are positive.
Calculating
Read MoreFundamental Economic Terms and Their Applications
Real Assets
Those things that are deemed adequate to meet human needs.
Needs
A sense of lack of something linked to the desire to satisfy it. The economy is particularly interested in those needs whose satisfaction requires the use of scarce resources.
Marginal Analysis
Assumes that people make decisions weighing the benefits against the additional costs at the time we choose.
Incentives
People change their behavior in response to a reward.
FPP (Production Possibilities Frontier)
A simple tool to study efficiency,
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